Flexible workspace stocks jump nearly 3-fold to 53 mn sq ft in 5 years; set to double by 2027: Report

New Delhi: Flexible workspace operators' portfolio across seven major cities has jumped nearly three-fold to 53 million square feet in the last five years and is expected to double by 2027 as the players look to expand business to meet rising demand from corporate clients, according to a report by JLL India and Smartworks.

According to the data, the operational flexible workspace stocks have risen to 53 million square feet as of March this year from 18.6 million square feet in 2018 calendar year. The total number of operational flexible desks is 8,39,250. A joint report of Real estate consultant JLL India and managed office space provider Smartworks has projected that the operational flex stocks would reach 106 million square feet by 2027 calendar year. "India's coworking or flex sector continues to get closely integrated into the commercial real estate mainstream, becoming key to occupier real estate strategies. The operational flex stock has now risen to 53 million sq ft across the top seven cities.

This equates to an overall office stock penetration level of around 4.7 per cent, making it among the fastest-growing flex markets globally," the report said. The flexible stock growth at a CAGR (compounded annual growth rate) of 28 per cent since 2018 has been truly momentous when seen in the light of the reset seen during the pandemic, it added. "Given that the flex segment has risen faster in its initial stage over the past half a decade or so at a rapid pace, we expect the growth to be more aligned to a steady state. As such, we expect that the operational flex stock is likely to reach around 106 million sq ft, doubling again over the next five years," the report said. The combined share of top three cities (Bengaluru, Delhi-NCR and Hyderabad) in operational flex stock is around 68 per cent.

Neetish Sarda, Founder, Smartworks, said the flex sector has been at the forefront of changing the dynamics of the commercial real estate market. "The continued rise of managed spaces, even post-COVID, has been truly remarkable, significantly propelling the overall growth of the flex segment. From FY21 to FY23, the extraordinary three-fold increase in the adoption of enterprise seats closely aligns with the widespread acceptance and adoption of the managed spaces and the overall flex model," Sarda said. JLL India Head of Research Samantak Das said, "As employees demand more from their workplaces and occupiers look to revitalize their offices while adding a greater degree of dynamic space planning to their overall portfolio strategy, the flex sector has emerged as a strong partner." Amal Mishra, Co-founder of Urban Vault, a Bengaluru-based managed co-working space provider, said flex-space at present constitutes a small portion of the total Grade A office space in India.

"However, there is significant untapped potential for its expansion. The demand for flex-space is on the rise, not only from small and mid-sized corporates but also from larger companies. Moreover, within the flex-space sector, many multinational corporations and major corporates are increasingly opting for managed flex-space solutions," Mishra said. Gurugram-headquartered Skootr Director and co-founder Puneet Chandra said the requirement towards the flexible space segment continues to grow significantly, as 'core plus flex' approach is at the forefront for all office stakeholders. "The sale deal momentum has substantially improved with an increase in demand for managed office space and we are positive that by the end of the year Skootr will be able to add 1 million square feet more to its current portfolio," Chandra said